The year’s biggest Utah economic stories were dominated by the state’s nation-leading recovery from the worst impacts of COVID-19 but issues emerging toward the end of 2021 could cast shadows into the year ahead.
Utah was at or near the top of best performing states when it comes to unemployment, job creation and economic growth throughout 2021 but as the year nears its end, leaders are keeping a close eye on a changing landscape.
Utah’s chief executive is decidedly bullish when talking about the state’s 2021 economic achievements but within that glowing review lurks a darker concern — how rising inflation and other pandemic-related fallout could impede Utah’s nation-leading performance moving forward.
“We’re the envy of virtually every other governor when it comes to our economy,” Utah Gov. Spencer Cox said last week during his monthly KUED news conference. “We have more deals being done in this state, more venture capital coming into the state than at any time in our state’s history.
“New startups … there’s never been a better time to work in the state of Utah. There are jobs available, jobs in every single industry, every single field.”
But Cox qualified his bright take on where the state’s economy has been with concerns about where it might be going.
“I’m very, very pleased with our economy and at the same time I’m also very, very concerned about inflation,” Cox said.
With his first year as the state’s top executive about to close out, Cox shared reports he’s been hearing recently from Utah businesses that include worries about impacts that are out of their control and could put dampers on growth, or even challenge their survival, in the year ahead.
Those concerns include inflation rates rising at a pace not seen for over three decades, difficulties accessing new capital and ongoing supply chain issues that began amid restrictions wrought by COVID-19 but have only been exacerbated by record consumer demand and collateral issues like the global labor shortage.
Cox said the accounts he’s getting from business owners are unprecedented.
“They all said we all have more business than we’ve had before, this could be the best year in our businesses history we can expand and do all of these things,” Cox said “And, (they said) we might not be in business next year because of inflation … access to capital … and supply chains. Those are the things that worry me.”
Cox also noted that his concerns about rising prices extend to Utah families whose wage earners likely did not see pay raises commensurate with U.S. inflation, which has been growing in excess of 5% each month for the past six months and hit 6.8% in November, the fastest year-over-year escalation since the early 1980s according to the U.S. Department of Labor.
See ya, California
Back in February, Utah’s high-flying economy earned accolades in the annual Milken Institute Best-Performing Cities Index with Provo-Orem regaining its nation-leading status after dropping to the No. 2 position in 2020 following top-place rankings in 2018 and 2019.
In its 2021 assessment, Milken researchers noted that Utah — which netted three top tier rankings with Salt Lake City in the No. 4 spot and Ogden-Clearfield at No. 9 — was benefitting from those employees and businesses fleeing high-priced Northern California zip codes for the more affordable, and economically vibrant, climes of the Mountain West.
“The pandemic has had an outsized impact on cities where the economic effects of the current recession are exacerbated by high housing costs,” said Kevin Klowden, executive director of the Milken Institute Center for Regional Economics and California Center, in a press release.
“By measuring for factors such as jobs, wages, and high-tech growth, the Best-Performing Cities Index offers analysis of how metro areas have fared based on the resilience of their local economy.
“And by incorporating data designed to gauge inclusivity, it provides important insights into how cities will be prepared to meet challenges and opportunities for future growth post-pandemic.”
Pandemic exposes inequities
In April, former U.S. ambassador and Utah Gov. Jon Huntsman Jr. joined JP Morgan Chase CEO Jamie Dimon for a discussion focused on what the U.S. did right in response to the global pandemic, as well as the underlying weaknesses they believe the public health crisis revealed.
Dimon praised the federal government’s reaction to bolstering the pandemic-racked economy for being “shockingly” fast but said the conditions wrought by the public health crisis also exposed deep fissures in how the country has navigated challenges with education systems, social inequities, health care and appropriate governmental regulation.
Dimon said the events of 2020 had “isolated to me, maybe the most important thing, the inadequacy of America competently doing its job.”
“We actually damaged America over the past 20 years with bad policies and I think these things just highlighted it,” Dimon said. “We were not prepared for the pandemic and have not been building the systems we need.”
Huntsman said it has been the “worst year imaginable” when viewed through the filter of health care challenges and social inequities and, though Americans showed a high degree of resilience, no one was prepared for the sweeping impacts of a global shutdown.
“I think the last year has really exposed the vulnerabilities around our nation,” Huntsman said. “And this is something that really needs to be used as a learning experience.”
Two calls, that’s all
In a virtual appearance recorded for an international business conference in June, local tech entrepreneur and newly minted Utah Jazz owner Ryan Smith told Cox that he had hard evidence that Utah had taken its place at the table of high-stakes players in the world of international finance.
And what was that evidence? Two calls.
Smith said that’s all it took to round up financial partners to join him ahead of buying Utah’s beloved NBA franchise last October. And Smith says the enthusiasm for investing in Utah shown by his minority partners — Australian tech entrepreneur and Atlassian co-founder Mike Cannon-Brookes, and Silicon Valley venture capital guru and Accel general partner Ryan Sweeney — is evidence of how highly regarded Utah has become in the world of business and investment.
“That is what happens as a benefit of all the work that’s been done here in Utah,” Smith said. “Success breeds success. I made two calls … and we walked into the NBA and said we’re ready to go.”
An outdoors to rule them all
In July, researchers uncovered what might be at the heart of Utah’s ability to consistently draw and keep top talent, in spite of wages that lag behind many competitors.
A report commissioned by industry group Utah Outdoor Partners and conducted by the University of Utah’s Kem C. Gardner Policy Institute found that, for incoming tech sector specialists, the prime motivator for choosing to live in the Beehive State is its one-of-a-kind outdoor assets.
At a July press briefing about the study, Cox said he wasn’t surprised by how big of a role outdoor assets play in workers’ decision-making processes, but noted some of the results were even more impressive than he’d expected.
“Now we have real evidence that … this has been an important piece of the growth we’ve had here,” Cox said. “I was especially amazed at some of the numbers, including that 85% of tech sector workers who chose to stay in Utah, despite a higher salary offer elsewhere, said that outdoor recreation was the reason they chose to stay here.
“You can’t pay people enough to leave once they get here and experience what we’re experiencing.”
Consumer prices, resident concerns on the rise
Utahns’ worries about inflation were also in evidence last summer, and a July Deseret News/Hinckley Institute of Politics poll captured just how rampant those concerns were.
In that survey, 85% of Utahns said they were very or somewhat concerned about inflation. And among that group, 25% said higher prices would be “temporary” versus 60% who believe inflation will be a “lasting” issue.
Following his review of the polling data, Phil Dean, former Utah state budget director and current public finance research fellow with the U.’s Gardner Policy Institute, told the Deseret News he was not surprised by the responses and made a prediction that, later in the year, would prove prescient.
“The poll highlights one of my biggest concerns and that relates to people’s expectations about inflation,” Dean said. “Those expectations can become guiding forces of economic activity. Consumers see not only what is going on today with inflation but sometimes start projecting that into the future.
“That’s where I get worried, when people expect future inflation and change their behaviors significantly.”
Build it, and they will come
Offering a lesson on economic interconnectivity, an innovation spawned by a Salt Lake nonprofit would prove to be a lifeline for art house cinema operations across the country.
In a September story, Salt Lake Film Society President and CEO Tori Baker said the organization had to get creative to stay viable following long-term shutdowns amid pandemic conditions and turned to technology as a response, building its own, in-house streaming platform to continue offering independent film programming to local filmgoers. But the system worked so well that it was eventually used by dozens of similar film exhibitioners across the country that, like the Salt Lake Film Society, operated on shoe-string budgets to bring diverse film programming to their communities.
George Myers, general manager and programmer for the nonprofit Amherst Cinemas in Massachusetts, said the Society’s @home streaming platform was a way to stay connected with its own loyal film audience, bring in a little cash and, most importantly, bring back workers who were idled by the pandemic-induced business drop off.
“It was just what we were hoping for,” Myers said. “It created a revenue stream that, while smaller, was steady and somewhat predictable and allowed us to bring some staff back on and mostly return to a pre-COVID-19 way of operating.”
The hunt for labor, and gifts
October saw Utahns sharing widespread concerns over ongoing labor shortage issues in a Deseret News/Hinckley Institute of Politics poll, with 68% of surveyed Utah voters noting their concerns about the number of unfilled jobs, while 27% identified themselves as not concerned about the issue and 5% were unsure of their stance.
That’s the same month an earlier-than-ever wave of holiday shoppers began the annual routine of checking off boxes on their gift lists but, for many, the running start hit some early barricades, as well.
A survey conducted the first week of October by data analyst firm Morning Consult found about 50% of U.S. shoppers had launched early starts to their 2021 holiday shopping but many of them are already running into challenges finding goods destined for gift wrapping.
Some 51% of early shoppers reported stores being out of at least one item they were after, while 54% said a hoped for product was out of stock online and 49% would have to wait out a back order or delayed delivery on an early purchase.
Morning Consult researchers said supply chain bottlenecks were leading to some product shortages that “will get worse before it gets better,” and even well ahead of the traditional holiday shopping kickoff following Thanksgiving, things were heating up.
And while the red-hot Cyber Week holiday shopping melee cooled down for the first time on record, retail industry watchers were still predicting a record holiday shopping year to close out 2021.